Chinese city sets limits on how far home prices can rise

Reuters Staff

2 Min Read

BEIJING (Reuters) - A small Chinese city said on Monday its property price growth must not exceed 5 percent in the next six months, and 10 percent in one year, in a rare move to openly dictate how far prices can rise.

The Kaifeng Municipal city government of China's central Henan province, a city of 5 million people about 80 km east of provincial capital Zhengzhou, issued measures to rein in its property market, including introducing price caps over new units and tightening pre-sale rules to regulate market irregularities.

It also said home buyers who buy newly built properties are not allowed to sell before holding them for three years, according to a notice on its website.

China's smaller centres, usually referred to as Tier-3 and Tier-4 cities, appeared to have benefited from curbs in nearby bigger cities as it resulted in spill-over of demand that has helped reduce a overhang of unsold properties.

Home prices in many smaller cities with no purchase restrictions picked up most visibly in March, according to data from the Statistics Bureau.

Clearance of the housing overhang in many of China's smaller cities is likely to persist, a senior economic planner said in late April.